RSWM Limited - Q1 FY27 Earnings Call Summary Wednesday, August 5, 2026 · 5:30 PM IST
Event Participants
Executives (4)
Rajiv Gupta (CEO & Joint Managing Director), Manoj Bansal (Chief Transformation and Risk Officer), Nitin Tuliary (President and CFO), Richa Singh (Conference Coordinator)
Analysts (4)
Amit Gupta (ICICI Securities), Avinash Nahata (Parami Financial Services), Prerna Jhunjhunwala (Elara Securities), Pushkar Jain (Millenia Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹1,161 crore | QoQ growth of 1.7% (₹1,142 crore in Q4 FY26); domestic demand healthy, export softer on a sequential basis |
| Domestic Revenue | ₹825 crore | Up from ₹774 crore in Q4 FY26; healthy demand across key customer segments |
| Export Revenue | ₹336 crore | Lower QoQ; Middle East demand subdued, international customers following calibrated procurement |
| Gross Profit | ₹466 crore | Up from ₹434 crore QoQ; margin expanded to 39.8% from 37.4% on favorable product realization and efficient raw material utilization |
| EBITDA | ₹94 crore | QoQ growth of 10.1%; YoY increase of 16.1%; margin improved to 8% vs 7.4% QoQ and 6.9% YoY |
| Finance Costs | ₹31 crore | Slightly higher than ₹30 crore in Q4 FY26 due to increased working capital requirements |
| PBT | ₹24 crore | QoQ growth of 33.5%; YoY increase of 153.7%; margin improved to 2.1% vs 1.6% QoQ and 0.8% YoY |
| PAT | ₹17 crore | vs ₹7 crore in Q1 FY26; lower than Q4 FY26 which included one-time tax benefit from concessional tax regime adoption |
| Power & Fuel Cost | ₹112 crore | ~10% decrease from ₹123 crore in prior quarter; renewable energy mix rising |
Geographic & Segment Commentary
Yarn - Synthetic: Capacity utilization at ~96%; reasonably good sales despite crude-linked polyester price volatility (polyester fiber prices rose up to 30% in March impacting downstream buying in April-June). Demand held up better domestically than internationally.
Yarn - Cotton & Melange: Strong quarter with capacity utilization of ~98% (cotton) and 90-93% (melange); favorable spread between yarn and cotton prices drove good margins. Second quarter continuing reasonably well.
Fabric - Knit: Capacity utilization mid-80s; segment faced significant pressure with subdued demand as customers are largely export-oriented garmenters. Cost pressures from higher fiber, gas, freight, labor, and chemical prices compressed margins materially. Positive demand signals emerging in last two months.
Fabric - Denim: Capacity utilization in the 90s; relatively balanced between export and domestic markets. Experienced margin pressure but comparatively less severe than knit.
Company-Specific & Strategic Commentary
Graphene Technology Development: Joint development with Birla Cellulose for graphene-based viscose fiber continues; first round of product received with further improvements targeted. RSWM (as part of LNJ Bhilwara Group) will operate a graphene plant supplying fiber for both polyester and viscose applications. Commercial rollout expected within FY27; management expects large TAM given performance and medicinal benefits.
RSWM 2.0 Initiative: Strategic cost discipline and operational excellence program continuing; focus on product mix optimization, disciplined procurement, and manufacturing efficiencies.
Garmenting JV for Denim: Board gave principal approval for forward integration into garmenting; RSWM will be majority shareholder. Phase 1 capacity of 5 lakh pieces per month; aligned with India-UK FTA opportunities. Operations to run independently with outside sourcing allowed; new competent team to be hired.
LNJ Greenpat B2B Recycling Project: 50,000 MT annual capacity for food-grade PET granules; capital deployment underway with civil construction started and critical machinery ordered. Commercial production expected Q1 FY28; expected revenue of ₹500 crore with ~15% EBITDA margins at peak. First year utilization guided at 75%, scaling to ~90-91% by year three.
Fabric Capacity Expansion: ₹92 crore investment to expand from 650 tons to ~900 tons per month, including 150 tons of new printing capacity. Expected to complete and begin trials in Q3 FY27; will enrich product mix and offer customers a complete range.
Renewable Energy Push: Renewable power consumption improved from mid-20s to mid-40s last year, reaching ~60% in current quarter. Targeting ~₹40 crore annual savings in power cost.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Quarterly Performance | All quarters expected similar or better than Q1 FY27 | Management confident in continued improvement; first quarter EBITDA margins of 8% seen as baseline |
| Power Cost Savings | ~₹40 crore reduction for FY27 | Driven by renewable energy mix (~60% of consumption) and consumption efficiency measures |
| Graphene Commercialization | Within FY27 | First round of Birla Cellulose product received; further improvements targeted |
| Fabric Expansion (Printing) | Q3 FY27 completion and trials | ₹92 crore investment; capacity to reach ~900 tons/month including 150 tons printing |
| B2B PET Recycling | Commercial production Q1 FY28 | Trials expected Q4 FY27; 50,000 MT capacity; ₹500 crore revenue potential at ~15% EBITDA margin |
| Garmenting JV | Initial capacity 5 lakh pieces/month | Board approval received; stake structure under discussion; phased expansion planned |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Price Volatility | Crude oil price fluctuation from West Asia conflict pushed polyester fiber prices up ~30% in March, causing customer destocking and demand uncertainty. Management notes continued crude volatility as a challenge for H1 FY27. |
| Subdued Export Demand | Middle East demand remained subdued; international customers following calibrated procurement approach. Recovery expected to be gradual rather than broad-based. |
| Fabric Margin Compression | Knit and denim fabric segments faced material margin pressure from cost inflation (fiber, gas, freight, labor, chemicals) and weak export-linked demand. Recovery initiating but not yet broad-based. |
| Geopolitical Uncertainty | West Asia conflict disrupting supply chains and elevating energy costs; evolving US tariff landscape could shift global sourcing patterns but may also create selective opportunities for Indian manufacturers. |
| New Business Execution Risk | PET recycling (food-grade) requires certifications and trials before commercialization; garmenting JV requires different operational skills. Management mitigating through cautious ramp-up (75% first year utilization) and dedicated team hiring. |
Q&A Highlights
Graphene Product Development Progress
- Question: Status of the graphene-based specialty fabric development with Birla Cellulose and Celon entities? Is it gaining traction? (Amit Gupta, ICICI Securities)
- Answer: Project is very much on track. First round of product received from Birla Cellulose; further improvements targeted. In-house development on sister side ongoing. Expect commercial rollout within this financial year. TAM is large given performance and medicinal benefits, but mastering the product comes first before market assessment. (Rajiv Gupta)
Demand Scenarios and Capacity Utilization
- Question: How are prices and volumes moving in yarn and fabric businesses separately? (Prerna Jhunjhunwala, Elara Securities)
- Answer: Quarter was highly volatile due to West Asian war, crude prices, and polyester prices rising ~30% in March. Customer stocking went to lowest levels. Synthetic yarn sales reasonably good; cotton and melange yarn benefited from favorable cotton-yarn spread. Capacity utilization: melange 90-93%, synthetic yarn 96%, cotton yarn 98%, denim 90s, knit mid-80s. Current quarter continuing similarly with demand stabilizing. (Rajiv Gupta)
Garmenting JV Details
- Question: What is the stake share, commissioning timeline, and revenue potential for the Benning garment unit JV? Will it use internal fabric? (Prerna Jhunjhunwala, Elara Securities)
- Answer: Board gave principal approval today; too premature for final figures. RSWM will be majority shareholder. Phase 1 capacity: 5 lakh pieces/month with potential for more phases. Logical downstream expansion from fiber→yarn→fabric→garmenting. Not a dedicated garmenting unit - will buy from outside where commercially viable. Initially denim only; knit may be considered in phase 2 or 3. (Rajiv Gupta)
B2B PET Recycling Project Progression
- Question: Status of food-grade chip business? What revenue/margins are expected? Any customer tie-ups? (Prerna Jhunjhunwala, Elara Securities)
- Answer: Project on ground - civil construction started, critical machinery ordered. Trials in Q4 FY27, commercial production in Q1 FY28. 50,000 MT annual capacity with expected revenue of ₹500 crore; industry EBITDA margins around 15%. No customer tie-ups yet; focus on creating world-class facility with best-in-class quality. (Rajiv Gupta)
Growth Guidance and Margin Outlook
- Question: What is the growth guidance and expected EBITDA margins for the full year? (Pushkar Jain, Millenia Capital)
- Answer: Forward-looking statements limited; but first quarter results positive with
12% improvement in cash profit QoQ. EBITDA at ₹94 crore (8% margin). Business-wise outlook positive; expect all quarters similar or better than Q1 FY27. Management prudently working on operational excellence and resource deployment. (Rajiv Gupta)
Fabric Segment Profit Decline
- Question: Fabric segment profit is negligible vs ₹35-36 crore last year - transfer pricing change? What happened? (Avinash Nahata, Parami Financial Services)
- Answer: No transfer pricing change. Quarter was tough for fabric due to global uncertainties, tariffs, subdued demand (especially knit fabric where customers are export-oriented garmenters), and cost pressures from higher fiber, gas, freight, labor, and chemical prices. Denim balanced between export and domestic; knit more export-dependent. Positive demand signals in last two months; outlook improving. (Rajiv Gupta)
Power Cost Reduction Trajectory
- Question: What per-unit power cost reduction has been captured from renewables? What further reduction is possible? (Avinash Nahata, Parami Financial Services)
- Answer: Renewable energy mix improved from mid-20s to mid-40s last year, now
60%. Power & fuel cost decreased from ₹123 crore to ₹112 crore (10% reduction). Expect >₹1/unit average reduction YoY; targeting ~₹40 crore annual savings at same utilization levels. Monthly/quarterly deviations expected due to solar/wind seasonality. (Rajiv Gupta)
PET Project Capacity Ramp-Up and Garmenting Operations
- Question: What is the utilization ramp-up for PET project? How will the garmenting JV manage labor-oriented operations? (Avinash Nahata, Parami Financial Services)
- Answer: First year utilization guided at 75%, scaling to 85% and then ~90-91% by year three. Food-grade certifications and trials require cautious approach. For garmenting, RSWM will hire a competent team; focus on machine design automation and skill development as top priority. (Manoj Bansal, Rajiv Gupta)
Fabric Capacity Expansion Benefits
- Question: What benefits will the ₹92 crore meeting capacity expansion deliver from Q3 FY27? (Avinash Nahata, Parami Financial Services)
- Answer: Capacity expanding from 650 tons to ~900 tons/month, including 150 tons of new printing capacity. Benefits: enriched product mix, capability to offer complete range to customers. Expansion to complete in Q3 with trials followed by production scale-up. (Manoj Bansal)
Key Takeaway
RSWM delivered a steady Q1 FY27 with revenue of ₹1,161 crore (up 1.7% QoQ) and EBITDA of ₹94 crore (8% margin, up from 7.4% QoQ and 6.9% YoY), driven by gross margin expansion to 39.8% from favorable product realization and renewable energy adoption now covering ~60% of power consumption. Domestic demand remained healthy (₹825 crore revenue) while exports faced a softer quarter from Middle East volatility and geopolitical disruptions. The company is advancing multiple strategic initiatives: graphene-based fiber commercialization within FY27 (joint development with Birla Cellulose), a ₹92 crore fabric expansion adding 150 tons of printing capacity (Q3 FY27), a 50,000 MT PET recycling project targeting ₹500 crore revenue at ~15% EBITDA margins (Q1 FY28 commercial start), and a new denim garmenting JV with 5 lakh pieces/month initial capacity. Management expects all quarters to be similar or better than Q1, with new capacities and product launches progressively contributing through the year; watch points include crude price volatility, fabric margin recovery, and execution of new business verticals.